Senate Proposes Bill To Increase App Store Competition, Apple and Google Feel the Heat

Senators have begun introducing new legislation to regulate the App Store and reduce Apple Inc. AAPL and Alphabet Inc. GOOGL control over app markets and phone software.

What Happened: Senators Richard Blumenthal, Marsha Blackburn, and Amy Klobuchar, D-Minn, introduced the Open App Markets Act on Wednesday. The bill has the primary goal of creating clear restrictions on the mobile app marketplace. 

According to Senator Blackburn, the senators hope that it will give "consumers more choice and startup companies a better chance to compete," according to Senator Blackburn.

Some of the provisions included in the bill are loosening restrictions that BigTech has put on developers, such as requiring the use of in-app payment systems and preventing developers from telling users when they can buy products cheaper elsewhere. 

The bill would also allow the creation of 3rd party app stores, so consumers could install apps without using Google and Apple software. 

The Coalition for App Fairness, a group made up of app developers, applauded the bill for "holding big tech companies accountable for practices that stifle competition for developers in the U.S. and around the world."

Why It's Important: In 2020, Apple's App Store generated Apple almost $64 billion in revenue, which was nearly a quarter of their total revenue that year. The Google Play Store generated $38.6 billion in revenue, which was also almost a quarter of their total revenue that year. 

Having those income sources restricted would be a devastating blow to both companies' income streams. Even if this bill is not passed, Apple and Google are still not out of the woods. 

Both companies are still dealing with antitrust litigation over their app store and other products both in America and abroad. 

Apple has responded by saying that the company has always been customer-focused and the current structure of the App Store is in the best interest of consumers.